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Pinterest marketing strategiesiPhone 5S and 5GStrategic alliancesTips for media interviewsTAX news: TAX benefits available to small businesscorporationsThirty something!Financial year end changes

Pinterest marketing strategiesWith over 27 million unique visitors and in excess of 200 millionpage views a day, Pinterest is one of the fastest-growing socialmedia sites out there and therefore it is becoming more importantto leverage this in all aspects of your online marketing efforts.Here are some ways to use Pinterest as part of your contentmarketing process:

Use Pinterest as a bookmark for popular storiesBy pinning stories that people are already talking about, it ensuresthat your content will be relevant and up to date with popularnews stories. Pinning articles on timely stories can be a great wayto get a quick surge of traffic to your page. You could alsorepurpose the pin by writing an opinion article based on theoriginal pin. This will provide either a comment or supportingargument in order to keep up interest in the topic and encourageengagement in your content.

F I N A N C I A L M A N A G E M E N T A C C O U N T I N G

always accountable

V o l u me 18 October 2013

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Create content based on infographicsIn much the same way as bookmarking articles, infographicsmake for great repurposed content, and it helps that Pinterestis full of them. In fact, Pinterest’s platform is just a reflection ofhow popular and important quality images and visually-drivencontent like infographics have become over the past few years,thus making it one of the best places to find infographics. Youcan create an article or comment piece in relation to aninfographic and host this article on the news section of yourwebsite. You can then place a link on Pinterest and drive trafficback to your site – thus capturing a new source of traffic foryour site.

Use Pinterest for inspirationFinding the most popular pins on Pinterest can serve as asource of inspiration for your content, allowing you to keepyour business’s content in touch with popular news stories. Onany given day you can find popular pins by browsing differentcategories and seeing which pins are being repeated, which canhelp you if your website and content is in a particular niche.

iPhone 5S and 5CApple have officially announced the iPhone 5C and iPhone 5S.Here is a comparison of the new must-have smartphones.

The iPhone 5C is essentially the iPhone 5 with an array ofcolourful polycarbonate shells; the internals, on paper at least,remain unchanged.

Like they did with the iPhone 4S, Apple is debuting newtechnology with the iPhone 5S. It is powered by a new chip, theA7, which is the first 64-bit smartphone processor, and Apple isclaiming that the new chip and 64-bit iOS 7 combine for a 2xperformance increase.

iPhone 5S owners do not have quite as many colours to choosefrom (just silver, grey or gold with a black or white fascia), butthey can opt for much more internal storage. While the 5C topsout at 32GB, the 5S comes in a 64GB model.

Both the iPhone 5S and 5C feature 4-inch ‘retina’ displays withnative resolutions of 1136 x 640. This is unchanged from theiPhone 5.

The iPhone 5S and 5C also both have an 8MP camera, but it’snot just about the megapixels when it comes to cameras. The5S has a larger aperture and its Complementary Metal-OxideSemiconductor (CMOS) sensor has a larger active area. It is alsosurrounded by two flashes (one white and one amber) whichshould make for much better shooting when artificialillumination cannot be avoided.

Dear Client,

Welcome to our monthly newsletter. We hope you enjoy thecontent. Remember that we are here to assist you. Please contactus if you need further information on any of the topics covered.

Best wishes

Rhoderic and Chrisna Roberts

Continues pg 2

In the current economic climate, businesses must look at newways to win customers. As such, many organisations are nowlooking at strategic alliances which allow them to access newsegments of the market.

If properly executed, a strategic alliance can be good forbusiness and good for the consumer. A strategic alliance issimilar to a joint venture, in that everyone remains an individualentity but comes together for a single purpose or period oftime to create something that could not otherwise be created.

There are challenges that business owners and managers mustconsider before entering into a strategic alliance with anotherbusiness. For instance, evaluating each partner's value andcapabilities is mandatory before agreeing to an alliance. Thewho, what, where, when and why questions all needclarification, with failsafe measures which must be agreed anddocumented before commencing the strategic alliance.

Here are some considerations for any business considering astrategic alliance:

Agreeing to the termsIt is necessary to identify the areas of interest that are yoursand to also identify the areas of interest that are relevant tothe other partners. Strategic interests must be similar, andproducts or services comparable. The figures must add up –each partner must have enough economic benefit for each toremain committed. There must be an operational agreement inplace, and it is advisable to engage the services of a lawyer inorder to draft this and other terms.

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As a business owner or manager, you will most likely have tospeak to the media at some point in your career. Here are sometips to help you deliver a compelling message when engagingwith editors or journalists:

Create a headlineEvery time you give an interview, the journalist should walkaway with a clear sense of what the headline will be; and youshould be the person who creates that headline in their mind.Prior to each interview, write down your perfect headline. Itshould be short (no longer than a sentence) and completelycompelling. During the interview, state your headline severaltimes, and place as many of your other answers as possiblewithin the context of that headline.

Have a conversation with the journalistJournalists are simply the channel between you and theaudience. Don't try to impress a journalist with the depth ofyour technical knowledge. Instead, visualise the potentialcustomer who is listening to the news on the radio or readingthe morning newspaper. That personal connection will helpensure that you're having a conversation with the audienceinstead of speaking at them.

Avoid jargonEvery profession has its own set of acronyms, specialised terms,and jargon that is not understood by the general public.Successful spokespeople know they have to expresscomplicated thoughts simply to ensure their messageresonates. Use metaphors, analogies and anecdotes to helpmake your point. If you are stuck, try explaining your topic insimple terms that say anyone can understand.

Focus on the positiveSpeak in complete sentences and do not give one wordanswers. If you are asked a negative question, respond with apositive answer – every cloud has a silver lining and there isgenerally something positive to focus on with your answer.Reflect your business in a positive light as much as possible –everyone wants to be part of success. Speak of yourorganisation’s successes and create a positive ‘vibe’ aroundyour brand.

Tips for media interviewsStrategic alliances

You can also take slow-motion videos with the iPhone 5S, butnot with the 5C. Whether this is down to the camera, the A7chip, or both, remains to be seen.

The iPhone 5S is 20 grams lighter than the 5C. At 112 grams, itweighs the same as the iPhone 5. Its measurements have notchanged either. The 5C is slightly chunkier, though not by much.It is about half a millimetre taller and wider, and 1.3mm thicker.

Apart from the new chip, display, and camera, the iPhone 5Shas one other feature the 5C does not have the Touch IDsensor. This is likely to be of interest to business users whowant security for corporate e-mail accounts. The Touch IDsensor is a biometric sensor in the iPhone 5S home button andscans the user’s fingerprint in order to unlock the phone.

Assessing contributionsWhat do you or each partner bring to the alliance? What is eachperson's purpose and goals? Does each partner have somethingunique to offer which adds value to the business relationship?

Defining and measuring progressWho is going to define or handle sales? What target market willbe pursued and when? How will the revenue be generated anddistributed? What will occur if the measurements are not met?A reporting structure should be agreed and put in place.Regular meetings (perhaps monthly or bi-weekly) should bescheduled and all key stakeholders should attend.

In summary, creating a strategic alliance is not something tobe taken lightly.

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always accountableF I N A N C I A L M A N A G E M E N T A C C O U N T I N G

A Small Business Corporation (SBC) may qualify for the taxconcession in section 12E of the Income Tax Act (hereafterreferred to as ‘the Act’). The advantages of this classificationinclude reduced tax rates for taxable income up to R550 000and accelerated tax allowances on manufacturing equipment.Other items, machinery, plant, implements, utensils, articles,aircraft or ships that would otherwise qualify for the deductionin section 11(e) are also included.

Many taxpayers are aware of the turnover and shareholdingrequirements in section 12E that have to be met in order toqualify as a SBC. This section however has a number of further,often more technical requirements, which are frequentlyoverlooked. This article briefly sets out the elements toconsider in determining whether an entity meets the definitionof a small business corporation as contained in section12E(4)(a).

Nature of the entity and its shareholdersClose corporations, co-operative and private companies (forpurposes of the Companies Act) are the only entities that canqualify as SBC’s. In addition to the nature of the entity, it isrequired that all the shareholders of an entity must have beennatural persons during the whole of the particular year ofassessment under consideration.

For the entity to qualify as a SBC, its shareholders or membersmay not have held shares or have an interest in the equity ofany other company during the year. It is important to note thatthis reference is to a company as defined for tax purposes,including a close corporation.

This requirement has been inserted to ensure that a taxpayer isnot able to split business across a number of entities, the sharesof all of which are held by the same shareholder, but where thegross income of each entity is below the maximum threshold insection 12E(4)(a) (see next element of the definition below)while the threshold is exceeded if the consolidated position isconsidered.

There are certain exceptions to this rule. A shareholder mayhold shares or interest equal to the following entities:

Certain regulated investments, such as JSE listed companies and collective investment schemes;

Body corporates established in terms of the Sectional Titles Act or share block companies;

Insignificant interests in social or consumer co-operatives, co-operative burial societies or primary savings and loan co-operative banks;

Friendly societies;Venture capital companies, as defined in section 12Jof the Act;Dormant companies that have never traded and do not

have assets valued at more than R5 000;Entities that have taken certain steps to liquidate, wind up

or deregister.

Gross income requirementsThe gross income, as defined in section one of the Act for theyear of assessment, should not exceed R14 million. If the yearof assessment is shorter than 12 months, this threshold shouldbe apportioned. For years of assessment ending during the 12months on 31 March 2014, this threshold has been increased toR20 million per annum.

It is important to note that this requirement refers to grossincome, as opposed to income. Amounts received or accruedthat would ultimately be exempt for tax purposes, such asdividends received from South African companies, would formpart of gross income and have to be included to determinewhether the entity’s gross income exceeds this threshold.

Nature of the entity’s incomeThe intention of the legislature in section 12 was to excludecertain investment and professional fee income earning entitiesfrom this regime. In order for an entity to qualify as a SBC,section 12E(4)(a)(iii) therefore requires that not more than 20%of the total receipts and accruals and all capital gains of theentity, may consist of investment income or income from therendering of a personal service. Each of these terms will nowbe considered in more detail.

Investment income requirementInvestment income firstly refers to certain passive investmentincome items that. These are dividends, foreign dividends,interest, royalties and annuities. Although the definition of SBCdoes not prohibit an investment holding entity (including aparent company with a subsidiary) from being a SBC, thereturns from the shares and other investments held by theentity may disqualify it. The requirement of the nature of theshareholders (see above) would however disqualify a subsidiarywith another company as a shareholder from being a SBC.

TAX news: TAX benefits available to small business corporations

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The definition also includes any proceeds from investment ortrading in financial instruments. Extensive involvement in sharedealing activities by an entity would therefore disqualify it frombeing a SBC.

Lastly, investment income furthermore includes income fromthe rental of immovable property, as well as any proceeds frominvestment and trading of immovable property.

Companies that own a few properties or that are involved inproperty development are therefore unlikely to qualify as SBC’s.

Personal service requirementThis requirement probably results in the most uncertainty of SBCclassification in practice. The definition of personal serviceconsists of two components namely: 1) the description of whatconstitutes personal service and 2) an automatic escape fromservices being classified as personal service.

The escape provision is discussed first, as meeting thisrequirement would result in a taxpayer not having to considerwhether the nature of the services rendered meet thedescription of personal service. A taxpayer cannot renderpersonal service if the entity employs three or more full-timeemployees who are not shareholders or connected persons toshareholders during the full year of assessment.

This requirement does get slightly more technical as it requiresthat these employees must ‘on a full-time basis be engaged inthe business of that company, co-operative or in closecorporation of rendering that service’ (that service being theservice listed in the description as discussed below).

It is difficult to argue that a person employed as a gardener by acompany where shareholders of the company are involved inrendering health services would be considered to be engaged inthe rendering of that service.

The application of this escape provision becomes even morecomplicated when considering persons who render supportservices but are not actively involved in rendering theprofessional service. Such person’s involvement should arguablybe sufficient to qualify as one of the three full-time employees.It is submitted that the proper application of the escape clausewill depend on the facts and circumstances of the employmentof each person and the nature of the service rendered.

If the entity in question does not employ three or more personsother than shareholders or their connected persons in renderingservices, the nature of the services must be considered todetermine whether it is classified as a personal service. Thiscould disqualify the entity from being a SBC.

A service will be a personal service if it falls within a list ofservices contained in section 12E(4)(d), but only if that serviceis rendered personally by any person who holds an interest inthat entity.

The services listed as potential personal service are ‘...anyservice in the field of accounting, actuarial science, architecture,auctioneering, auditing, broadcasting, consulting,draftsmanship, education, engineering, financial servicebroking, health, information technology, journalism, law,management, real estate broking, research, sport, surveying,translation, valuation or veterinary science...’. The items listedcould cover an extremely wide field of services. Take forexample the field of consulting services.

Income Tax Court case number 12860 dealt with the question asto the exact nature of the services included in this list. In thisregard, Mbha J, expressed the following views: ‘ The fields ofactivity listed as personal services in section 12E(4)(d) fall intotwo categories, the first of which is accounting, actuarialscience, architecture, auctioneering, auditing, broking,draftsmanship, education, engineering, health, informationtechnology, law, management, real estate, research, secretarialservice, surveying, translation, valuation and veterinary service.These are all professional or quasi-professional activities, thatrequire a particular qualification and in many cases a licence,certificate, or membership of a professional body before theperson concerned can participate in that activity. The secondcategory comprises broadcasting, commercial arts,entertainment and sport, none of which is relevant to theactivity carried out by the appellant’ (own emphasis added). Ifin doubt as to whether a specific service falls within the ambitof this list or not, the above views may be useful guidelines tofollow as the intention of the legislature was to excludeprofessional service income.

Entity’s other tax classificationThe last requirement is that the entity must not be classified asa personal service provider (PSP), as defined in the FourthSchedule to the Act. The detailed definition of a PSP is a topicfor a future newsletter, but in brief an entity used by a naturalperson to render services to a client in circumstances wherethat person would otherwise have been considered to be anemployee of the client.

Concluding thoughtsFrom the discussion above it is evident that the classification ofan entity as a small business corporation can be a morecomplex matter than it appears on the face of the definition atfirst sight. Getting this classification wrong could result insignificant understatement penalties due to an incorrect SBCclassification. This can be an unutilised opportunity if acompany meets the definition and yet is not aware of it.

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Monica Viviers has achieved thirty years of service with LloydViljoen and maintains that the dynamic team of accountantsand auditors at the firm’s office in Randburg makes her feel‘thirty something’ most of the time.

Monica started in October 1983 as the personal assistant to BillViljoen, one of the founding members of the firm. She startedher career with what was then known as Trust Bank inJohannesburg in 1966, first as secretary to one of the BranchManagers and then for the Marketing Manager of the SouthernTransvaal Administration (Gauteng South).

From Trust Bank she moved on and joined the Hans MerenskyFoundation as private secretary to the Chief Executive. She alsotook charge of marketing which included the sales of hardwood to the mining sector in cooperation with selected sawmills. Monica’s experience suited her well to start her ownbusiness and she became co-owner of a hardware businesswhich she sold after three years and then joined Lloyd Viljoen.

“This was a real challenge as I was not accustomed to thefinancial sector with professional controls in all aspects ofassignments including time management and reporting,” saysMonica. “Technology has changed the way in which we dothings – from the manual typewriter and no fax machines tocomplete office automation. This also influenced our approachto client audits, adjustments and execution, includingcomputerised preparation of financial statements. The newgeneration has no idea of just how lucky they are for havingescaped the era prior to digital technology.”

Monica is steadfast in her approach towards a professionalcareer. “Prioritise the order of the difficulty rating of the tasksat hand. Diligence, loyalty, discipline and honesty rate highest inmy quest for workplace excellence, while acknowledgementfor a job well done should never be considered a side issuewhen credit is due.”

She claims that when you are happy in your job, all the otherpositive variables fall in place including being energetic ineverything you do. “It rubs off onto colleagues and everyonebecomes professional and cooperative.”

Thirty something!

Monica claims never to have abused sick leave or being awayfrom her work station without good reason and says: “It isshocking how this has changed over the years and theincidence of absence from work is being exploited and abusedto the very detriment of employers.”

In a tough competitive environment, sustaining client relationsbecame a major component in the business mix. “The mannerin which clients are being treated reflects on the company’simage and all credit to the Lloyd Viljoen team as we still haveclients dating back to when I started 30 years ago. Successfulpeople do what unsuccessful people are not prepared to doand this includes being friendly, supportive and displaying basicgood manners, either on a face-to-face situation with the client,on the telephone or via online communication.”

Monica says that to deliver quality in the work place thereshould be diversified interests. She enjoys gardening,needlework, making jewellery, home entertainment with familyand friends, a passion for her dogs and extensive local andinternational travel.

What about the future? Monica concludes: “Until I reachretirement I would like to continue to be a loyal employee andcontinue my work with confidence. It is in this spirit that I willcontinue to display the greatest measure of respect andappreciation to all. “

Financial year end changes

In order to determine the exact date and time on which thefinancial year end is changed, one needs to look at theprovisions of the Act. Section 27(4) of the Companies Actthat determines:

“The board of a company may change its financial year end atany time, by filing a notice of that change, but-

(a) it may not do so more than once during any financial year;(b) the newly established financial year end must be later than the date on which the notice is filed; and(c) the date as changed may not result in a financial year ending more than 15 months after the end of the preceding financial year.”

As pointed out above, ‘filing’ in terms of the new Act simplymeans that the notice is received by the CIPC (Companies andIntellectual Property Commission) recorded in the CIPC’scomputer system, or the date on which registered or other mailis received by the CIPC). The CIPC is not required to approve orvet any decisions or actions of the company. The changing ofthe company’s financial year end will be complete once therelevant notice (CoR25) is received by the CIPC.

Continues pg 6

Monica Viviers attained thirty years of service with Lloyd Viljoen

Companies act snippetAuthor Dr Johan Erasmus, Director at Deloitte

Deadlines looming

30 October 2013:Interim Employer reconciliations for 2014

22 November 2013:All non-provisional tax payers’ returns

that file tax returns via e-filing

For companies – electronic submissiondeadline for companies and close corporations

within 12 months after year-end.

See deadlines

B u s i n e s s c a n b e t a x i n g

Chartered Accountants SA

1st Floor, Randpark Building20 Dover Street,Randburg

PO Box 2444,Randburg,2125

Tel: +27 (0) 11 789-1011Fax: +27 (0) 11 789-1012E-mail: info@wallrich.co.zaWeb: www.wallrich.co.za

S u b s c r i b e

U n s u b s c r i b e

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Change of auditorThe Act requires certain companies to appoint an auditor (publiccompanies, state owned companies, and any other category ofcompany that meets the requirements set out in the Regulations).The Act provides for the appointment of the auditor byshareholders at the annual general meeting, and where a vacancyexists for the directors to fill the vacancy within 40 business days.Section 85(3) requires the company to file a notice (CoR44) withinten business days after making the appointment.

In addition the company has to maintain record of its auditors(section 85(1)). Again the Act does not link the filing of the relevantnotice to the effectiveness of the appointment. However, where anauditor resigns, the Act expressly states that the resignation of theauditor is effective when the notice is filed (section 91(1)). Thisimplies that a resignation letter submitted to the company by theauditor is not sufficient to terminate the appointment of theauditor. In order to complete the action, the company has to filethe CoR44. The resignation will only be effective on the date andtime when the notice is received (and recorded) by the CIPC.

Amendment of the Memorandum of Incorporation (MOI)Where a company amends its MOI, it has to file a Notice ofAmendment (CoR15.2) within ten business days after suchamendment (section 16(7)) read with Regulation 15(3)). Where acompany amends its MOI by means of a special resolution ofshareholders (as provided for in section 16(1)(c)), the amendmentwill not be effective immediately. This constitutes the one instancewhere the Act delays the effectiveness of a special resolution ofshareholders. Under other circumstances, a special resolution willtake effect as soon as the required number of votes is obtained.However, where a special resolution is obtained to amend the MOI,the amendment to a company’s Memorandum of Incorporationtakes effect on the date of filing the Notice of Amendment, or the

date set out in the Notice of Amendment (section 16(9)), which islater.

ConclusionThe new approach to enforcement of the Act, as illustrated by theexamples mentioned, is in line with the Government’s objectives forreform of our corporate law. The high-level objectives of the newCompanies Act (as per a DTI presentation to Cabinet, dated 31January 2001) were to:

Reduce the regulatory burden for small and medium-sized firms (mostly owner-managed, privately owned)

Enhance protection of investors through enhanced governance and accountability (especially public interest companies), minority protection and shareholder recourse

Create a more flexible environment, without compromising regulatory standards and objectives to enhance investment.

The effect of the corporate law reform is clearly that the regulatornow regulates with a much lighter touch, and that companies anddirectors need to bear responsibility for their actions. As aconsequence, this new regulatory regime allows companies to takeand implement their own decisions seamlessly, without having towait for approval or a go-ahead by the CIPC. In most instances,mere ‘filing’ and ‘delivery’ will suffice to ensure compliance with theAct. Where documents are rejected by the CIPC, it does notinvalidate the particular company action – it merely implies that thecompany needs to improve its administrative game. Of course, thenew approach also points to the need for directors to carefullyconsider their decisions and actions, and to take into account thewider context and impact of such decisions. The Act clearly makes iteasier for companies to conduct business and has increased theresponsibilities of directors. For more information visit:www.accountancysa.org.za.